Offering areas of new business for specialist companies which have benefited from the use of such technology in smartphones, a tap of a finger could soon suffice to identify credit card shoppers and rail commuters.

Having already become the market leader in a crowded sector for supplying such sensors for smartphones, Sweden’s Fingerprint Cards (FPC) sees biometric smart cards — those using fingerprint identification — becoming its fastest growing market as early as 2018.

Prompting questions about whether FPC can maintain its runaway rise in valuation, others within the industry are not convinced the smart card business will take off so quickly.

Apple, which uses its own in-house supplier, helped to popularize the technology for the use of fingerprint sensors in phones, its demand soared resulting in FPC’s share price surging around 1,600 percent last year. FPC now has a market value of around $4.1 billion.

When compared to techniques such as using pin codes to confirm identification, advocates say, the technology offers greater security and simplicity.

With an equal number planning to enter the market, the fingerprint sensor business has a handful of companies supplying significant volumes today. Three are based in the Nordic region where technology companies have thrived.

FPC says it is in initial talks with potential big customers for smart cards as it needs to maintain its momentum. It declines to name names at this stage.

“Our ambition for smart cards, and all other segments, is that we shall continue to be number one,” FPC’s Chief Executive Jorgen Lantto told Reuters.

However the closest rival to FPC in sensors for smartphones, Silicon Valley firm Synaptics, is more cautious on new markets.

“It’s hard for me to project market share in a segment of the market (when) we’re not sure when it’s going to happen,” said Anthony Gioeli, vice president of marketing in the biometrics division of Synaptics.

A widespread adoption of biometrics in smart cards could take some five to 10 years is expected Sascha Behlendorf, a card systems product manager at Germany’s Giesecke & Devrient, one of the top three smart card makers.

Building a technology business based on an old Swedish fingerprinting patent, Gothenburg-based FPC has been around for almost two decades. The firm has also benefited by hiring staff from Nokia and Ericsson as their mobile phone businesses declined which left it well placed when the market expanded.

The huge leap in valuation for FPC has helped expectations for new markets, analysts say.

However citing what he called unwarranted share price appreciation and repeated his target price of 450 crowns, Carnegie analyst Havard Nilsson this week cut his recommendation for FPC to “sell” from “hold”. The shares traded at 524 crowns on Thursday.

“Given that smartphones should constitute 60-70 percent of the global addressable market (in 2020), we do not believe new verticals, such as smart cards, will be able to compensate for competitive pressure in consumer electronics,” Nilsson wrote.

He sees earnings per share peaking at 37 crowns in 2018.

(Adapted from reuters.com)